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141977 - Engenius, Inbc. v Ford Motor Company

EnGenius, Inc. and EnGenius-EU, Limited,
 
Mayer Morganroth
 
Plaintiffs-Appellees,
 
v
(Appeal from Ct of Appeals)
 
 
(Wayne – Sapala, M.)
 
Ford Motor Company,
 
Edward H. Pappas
 
Defendant-Appellant.
Philip J. DeRosier

Summary

​EnGenius, Inc. (EnGenius) and EnGenius-EU, Ltd. (EEU) sued Ford Motor Company, claiming that Ford had violated two contracts with the EnGenius companies. The first contract was a technical support agreement referred to by the parties as the “FACTS Contract.” That agreement called for EnGenius to provide technical support for the “FACTS system,” an end-of-the-line vehicle testing system, for the life of Ford’s use of the system. In return, Ford agreed to exclusively use EnGenius for support, and EnGenius agreed to maintain the resources and personnel necessary to support the system as it was phased out. The second contract was a five-year agreement known as the “eCATS Contract,” under which EnGenius was to develop and implement the replacement system for the outdated FACTS system. To pursue the eCATS Contract, EnGenius agreed to create a European affiliate known as EEU, which would support the eCATS system in Ford’s European plants.

After EnGenius sued, Ford filed a motion, arguing that the parties had agreed to resolve such claims through binding arbitration. The court granted Ford’s motion, and the matter was submitted to a three-member arbitration panel. By a vote of 2-1, the panel awarded EnGenius $22,689,898.43: $1,239,885 in lost profits for Ford’s breach of the FACTS Contract, $14,425,954 for Ford’s breach of the eCATS Contract, and $1,946,131 for tortious interference. The circuit court confirmed the arbitration award.

Ford appealed, and the Court of Appeals affirmed the circuit court in an unpublished per curiam opinion. With respect to the FACTS Contract, Ford objected to the arbitration panel’s conclusion that the document containing the arbitration clause was not part of the parties’ agreement. But, argued Ford, if the arbitration agreement was not part of the parties’ FACTS Contract, then the arbitration panel did not have jurisdiction to rule that the contract was breached. The Court of Appeals rejected this argument, ruling that Ford’s successful effort to send all claims in the parties’ dispute to binding arbitration amounted to an implicit agreement to allow the arbitrators to decide the makeup of the FACTS Contract and adjudicate related claims. The panel also concluded that, “once the trial court determined that there was a valid agreement to arbitrate, granted Ford’s motion for summary disposition, and sent the entire dispute to arbitration, the arbitrators lacked the power to divest themselves of jurisdiction over the matter.” Turning to Ford’s next argument, the Court of Appeals was not persuaded that the arbitration panel made an improper damages award with respect to the eCATS Contract; the Court of Appeals concluded that the arbitration panel’s award was proper compensation for work that had already been completed. Finally, the Court of Appeals ruled that arbitration panel did not err by finding that Ford tortiously interfered with EEU’s relationship with its own employees. Ford appeals.